I was in the doctor's office waiting room a couple days ago thanks to an ear infection, or sinus infection, or cold, or whatever it is that has me down. Anyway, all the magazines were for "Parents" or "Your New Baby" or whatever, and the only other one was "Men's Health." So "health" is about as far from my life as I can imagine, but I picked it up and read it anyway.

One story in the March issue is "The 6 New Rules of Rich". Unfortunately I can't find an online link, but rule #1 is "Your brain wants yu to be poor." And here's why:

The opening salvo is of a 2001 study of "undersavers" who expressed an intention to "save more" during the next year. Yet less than 1 in 8 actually did so. The reason, it turns out, may have more to do with biology than with willpower.

"The rational part of our brain is the cortex, the folded tissue on top," explain David Laibson, PhD a professor of economics at Harvard and one of the study authors. "It values the delayed future just as much as it values the immediate present. But beneath the cortex is an older neural system that values the present much more. So that system basically says, "If it comes now, great. If it comes in a week, I really couldn't care less."

This neural sstem dates back to a time when staying alive - today - was the only order of business. And half-a-billion-years-old habits die hard. "As our cerebral cortex evolved, the first thing it did, as with any biological innovation, was fit in," says Read Montague, PhD, a professor of neuroscience at Baylor College of Medicine. "There was no biological incentive, financially speaking, for our rational structures to contravene our biological instincts."

This biologial imperative, fighting with the newer, rational cortex drive, might explain why such a large percentage of people cannot (some will say 'will not', and I wouldn't argue) save, and why so much of the populace lives from paycheck to paycheck.

Anyway, I thought it interesting. There you go. "It's not my fault, your honor, I have this biological problem dating back 500,000,000 years."

This biologial imperative, fighting with the newer, rational cortex drive, might explain why such a large percentage of people cannot (some will say 'will not', and I wouldn't argue) save, and why so much of the populace lives from paycheck to paycheck.

It is one of the reasons the I 'trick' my brain into thinking I earn much less than I do. I'm not a LBYM kind of person. I do live below my means, but I don't have a LBYM lifestyle at all. I just trick myself into thinking that I make much less than I do. From that reduced amount I live paycheck to paycheck and spend horribly. Of course most of my paycheck goes into another account that I don't touch.

So I live extravently for someone making half what I make. I know perfectly well if I were to get my mitts on that cash I could burn through it at an amazing rate.

It is a bit like the old bit of advice increasing your contribution to your 401k. Do it the same week you get a raise. It will be revenue neutral and your 'brain' will not get a chance to get used to the money, so you wont 'need' it.

My number one priority to retiring early is keeping my money out of my wallet.

Oddly, Adrienne saves naturally. She can pinch a penny well, and it will drive me nuts. I just can't spend 5 minutes trying to figure out which bar of soap is the better deal. What she can't do is invest the money. She has zero risk tolerance and ends up putting the money in an account with wretched returns. All of her saved money goes in these accounts, even money that she will not need in the next 5 years. So I have to invest the money. Oddly, once it is in an investment account I don't feel the need to spend it.

My number one priority to retiring early is keeping my money out of my wallet.

I suppose DH and I do something like this. All of our income is budgeted, some of it to savings; but "allowance" is also a budget item. So for discretionary items, that allowance is all I ever really see.

Of course, I've got enough in credit to buy a house, a couple of cars, and a fleet of rainbow-colored iPods. I haven't carried a balance in many years, though. I do find myself reading the Credit Card board here sometimes to remind myself how much I HATE carrying a balance, and how saving for financial independence means so much more to me than going into debt for (oh, just a random example) an Apple 30" monitor.

Some days the biological imperative wins, and I have an Amazon.com orgy. But I've managed to condition my brain to keep those orgies within my means. (Christmas is still hard, though. Somehow it feels less virtuous to be frugal with presents, which is all the excuse I need to let that ol' live-for-today click-and-buy instinct go absolutely wild.)

Oddly, Adrienne saves naturally. She can pinch a penny well, and it will drive me nuts. I just can't spend 5 minutes trying to figure out which bar of soap is the better deal. What she can't do is invest the money. She has zero risk tolerance and ends up putting the money in an account with wretched returns.

Sounds like you complement each other well. I hung around for a while with a guy of the "I work hard; I deserve it!" school. Not a good combination for long-term success.

Sounds like you complement each other well. I hung around for a while with a guy of the "I work hard; I deserve it!" school. Not a good combination for long-term success.

We do.I use the house account like a credit card now. We usually float two grand in there just in case.

But it is a shared account, and Adrienne will see any purchase I make. I think I'd rather deal with the credit card debt than the 'splaning I'd have to do if I purchased a 30" monitor without her approval.

It is a good fit. I have friends where both of them are spenders and they get themselves into all sorts of trouble. I have friends where both of them are savers, but we don't see them much. They are so focused on not spending money that they never do much. And like Adrienne they have their money in super safe investments so they are minamizing the joys of compound interest.

Mrs. Goofy and I are like that. Neither of us bothers with a "budget", but then neither do we drop money with wild abandon, either. She buys what she wants, I buy what I want, and sometimes we go overboard (yikes, I spent $700 at Woodcraft this month) but we have sufficient income to do that. OTOH, my car is a 1997, and hers a 1998, we have no mortgage, so it works out.

One other thing from the article:

People cannot be counted on to do what's best for themselves". So says professor George Loewenstein, PhD. Haisley's advisor and a trailblazer in the budding field of behavioral economics. This simple observation is what sets behavioral economics apart from neoclassical economics, the dominent school of financial thought today. That's been the problem with traditional economists: Their numbers are sharp and they give great graph, but they've been leaving people out of their equations. Now psychology can provide answers to questions economics alone can't compute."

To folks who spent time on the other RE board, I will say that this sounds, in part, like Hocus theory. In spite of intercst's brilliant work on safe-withdrawal rates, there is some portion of people who cannot abide such a simple formula, and who will never be able to sit on a severely down portfolio, confident that it will rebound - someday. Hocus was one such, although he also had other problems worth addressing, which made his arguments difficult, if not impossible, to render.

Anyway, I thought it interesting. There you go. "It's not my fault, your honor, I have this biological problem dating back 500,000,000 years."

I have a 100% sure cure for this condition. Just send $39.99 plus postage and handling ($29.99), and I'll send it out. It's been approved by FDA, SEC, ATF, FBI, DEA, CIA and...the list goes on. Don't wait, order now.

"The rational part of our brain is the cortex, the folded tissue on top," explain David Laibson, PhD a professor of economics at Harvard and one of the study authors. "It values the delayed future just as much as it values the immediate present. But beneath the cortex is an older neural system that values the present much more. So that system basically says, "If it comes now, great. If it comes in a week, I really couldn't care less."

This neural sstem dates back to a time when staying alive - today - was the only order of business. And half-a-billion-years-old habits die hard. "As our cerebral cortex evolved, the first thing it did, as with any biological innovation, was fit in," says Read Montague, PhD, a professor of neuroscience at Baylor College of Medicine. "There was no biological incentive, financially speaking, for our rational structures to contravene our biological instincts."

[p. 148, Men's Health, March 2007]

OT: i recall reading some famous biologist a couple yrs ago on the 'politics of environmentalism' ... He believed that H.saps evolved to look about 6 months in to the future .. so he wasn't optimistic we'd do anything to prevent a problem 20yrs away.

OT:i recall reading some famous biologist a couple yrs ago on the 'politics of environmentalism' ... He believed that H.saps evolved to look about 6 months in to the future .. so he wasn't optimistic we'd do anything to prevent a problem 20yrs away.

Easier to do when you are still young enough for it to rebound.When you are short on time, not so easy.

well yes .... "rebound -- someday" not very helpful if 'someday' is 17yrs after you're dead.>>

intercst's plan for financing early retirement is based on actual experience with the American economy going back about 150 years.

The basic theory suggests that an early retiree can withdraw an inflation adjusted 4% withdrawal rate from properly invested retirement assets long time with a 100% confidence level that it will work long term, if things don't get worse than at any time in the past 150 years (1929 included).

This involves a diversified portfolio of stocks and a five year pool of living expenses invested in bonds, 1/5th of which mature each year.

The big risk is that you retire in 1929 and get hit immediete with big stock declines. Should that happen, you liquidate stock at low prices only to maintain that five year bond plan. Longer term, stock prices tend to recover.

So you don't to worry about "someday." The worst case scenario is already built into this financial plan.

I guess this board really hasn't discussed this key contribution to planning early retirement though.

This biologial imperative, fighting with the newer, rational cortex drive, might explain why such a large percentage of people cannot (some will say 'will not', and I wouldn't argue) save, and why so much of the populace lives from paycheck to paycheck.

I really doubt it's that simple. If it is, that would suggest that the Japanese and the Chinese (who have, by American standards, extraordinary rates of saving) are genetically quite different than us. I don't buy that.

I think it's a cultural thing (1), and a wealth thing (2).

For the first, we are definitely a status-conscious society. And our capitalist system encourages (maybe even requires) that we all be good consumers. Therefore, brands are equated with status. You are encouraged to buy particular brands to buy status. Don't have the money for it? No problem; credit's easy to get.

For the second, essentials like basic food and clothing are quite cheap for many (maybe even most) Americans. Most consumer electronics items get cheaper practically by the month. Even cars and houses are cheap-ish lately, if you only think in terms of monthly payments and not debt totals.

Hmm. Maybe it's also an education thing (3). Many Americans don't understand the consequences of taking high-interest revolving-credit loans, or interest-only adjustable-rate mortgages. But thanks to (1), there's no incentive to change that. Not from the people selling us stuff anyway.

Taken together, and it's not too surprising that more people don't live more frugally, spend less and save more. Not only is it not shameful to be hugely in debt to pay for a lifestyle, it's not even unusual here. It's practically expected, by many people.

And so the cycle goes, reinforced. It can't last forever though. If we suffer through a major economic disaster, along the lines of the Great Depression, frugality will come back to America, by necessity. Helluva way to get it back. But, there ya go.

intercst's plan for financing early retirement is based on actual experience with the American economy going back about 150 years.

Yes, we know.

So you don't to worry about "someday." The worst case scenario is already built into this financial plan.

No, it is not "the worst case." It is "the worst case in the 150 years in only the American economy." It does not include being in the Weimar Republic during the hyperinflation of the 1920's, for example. Or in Argentina in the 1970's, to name a more recent instance.

You missed the entire point of the article. Some people (not you, because you're 100% rational, always) aren't wired to hold the intercst model perfectly, and WILL panic and sell. In some cases, they might even be right, as we have seen many economies collapse entirely and getting out while you have "a little" is better than not getting out and having "nothing". Russia, 1990.

There is no magic genie who says such a catastrophic event couldn't happen here. The chances are small, I grant you, but the intrcst formula is not perfect for all time and all places.

Some people don't take the "long view" simply because they're not wired to do so. That's the idea behind behavioral economics, which involves "grey", as opposed to textbook economics, which has pretty charts and proves that "supply and demand" answer everything, always.

I guess this board really hasn't discussed this key contribution to planning early retirement though.

We're far ahead of you on this. You should try to follow the conversation better.

For the first, we are definitely a status-conscious society. And our capitalist system encourages (maybe even requires) that we all be good consumers. Therefore, brands are equated with status. You are encouraged to buy particular brands to buy status. Don't have the money for it?

I have often thought that I'm fortunate to have chosen the career (engineering) that I did. On the one hand, it pays well. OTOH, it's more/less expected that we're a quirky bunch. No one looks cross-eyed at you for dressing in Salvation Army chic, nor driving a beat-up car.

I have often thought that I'm fortunate to have chosen the career (engineering) that I did. On the one hand, it pays well. OTOH, it's more/less expected that we're a quirky bunch. No one looks cross-eyed at you for dressing in Salvation Army chic, nor driving a beat-up car.

I went to a retirement luncheon in December. A former coworker said I was remembered in the office for two things: my computing abilities & my car. All the time those people knew me, I was driving the same car (1989 Festiva). He said there was a bet as to whether I would show up at the luncheon in the same car. I did.

All the time those people knew me, I was driving the same car (1989 Festiva).

There are many things that I've done over my adult life that made it possible for me to retire early. Driving mid-price cars for a long time is one. Others include not taking expensive vacations, not purchasing a trophy house, sending my son to public university (UNC-CH), not getting divorced, and not trying to keep up with spendthrifts. There are others, but these stand out in my mind.

I really doubt it's that simple. If it is, that would suggest that the Japanese and the Chinese (who have, by American standards, extraordinary rates of saving) are genetically quite different than us. I don't buy that.

This is a point well made. I wish you could address it to the PhD's who wrote the study.

That said, there are similar problems in other societies, including the Japanese and Chinese. There is greater "shame" there, so cultural influences certainly have some bearing, perhaps major bearing. But I don't think you can chalk it up to "all one" or "all the other."

There is no doubt in my mind that the human animal - like so many others - is wired for immediate gratification. It's just that we are also wired, at least some of us, for the reality of what that sometimes entails.

I happen to have a sister-in-law who is not. I knew people growing up who were not. My wife's (deceased) mother was not. It's like that gene was simply missing, or something.

Every large purchase should be accompanied by a question(s): "Who are you trying to impress?""And why?"

I make large purchases all the time. (OK, not all the time, but frequently, sort of.) Most recently: A digital camera, a flat screen TV, an addition to the house. Never was it "to impress." I bought the TV because a lightning strike took out the old one, and as long as I needed a new one, I bought an HD model. The digital camera? The old one died. The addition to the house? To improve the layout and give us some closet space.

When I buy a new car it won't be "to impress", it will be for my own comfort, and it will be a luxury car (I have an Infiniti at the moment, and will likely repeat - although I'll wait until this one gets too expensive to maintain. I don't need "new" for the sake of "new".)

yikes, I spent $700 at Woodcraft this month

I am so glad there's not one of those close to home. :)

I am embarrassed to say that was entirely on "pen supplies." My brother in law came to visit, brought his mini-lathe, got sick and went home without it. While he is gone I decided to make some pens, and some more, and some more, and well, some more. So I have decided that all the relatives are getting pen & pencil sets for next Christmas (handmade! and pretty nice looking, if I do say so myself), and some will also get some glamour pens, and I will still have a dozen or so left over. OK, I got carried away and am justifying this short-term whim, but luckily I lose the lathe in another couple weeks, so I can't do any real long-term damage.

Maybe that's part of it. I managed to recover about $400 in "gifts" with my $700 in "spending." So I'm only down $300! At this rate I'll be saving my way to salvation.

I make large purchases all the time. (OK, not all the time, but frequently, sort of.) Most recently: A digital camera, a flat screen TV, an addition to the house. Never was it "to impress." I bought the TV because a lightning strike took out the old one, and as long as I needed a new one, I bought an HD model. The digital camera? The old one died. The addition to the house? To improve the layout and give us some closet space.

I with you Mr Hoofy, I don't give a rats patoot about what others think but we have quite a "list" for the house. It is all about balance.

Heck I've planted roses around the house and while the neighbors might think they are pretty, it's all about me. I did it because I like them. Baby Brother tried to talk me out of it because roses are a lot of work. I tried explaining that it isn't work if you want to do it and nobody is paying you to do it.

But yea, I have a list of things I want to do with the house, and things we need and trips we would like to take. I'll balance it with my desire to retire early. If that keeps me working a couple more years, then I'm ok with that.

<<intercst's plan for financing early retirement is based on actual experience with the American economy going back about 150 years.

Yes, we know.

So you don't to worry about "someday." The worst case scenario is already built into this financial plan.

No, it is not "the worst case." It is "the worst case in the 150 years in only the American economy." It does not include being in the Weimar Republic during the hyperinflation of the 1920's, for example. Or in Argentina in the 1970's, to name a more recent instance.>>

Yes, we know. That caveat is mentioned in the sentence you posted above.

It's an important caveat, too, I agree. The early retiree who quit working in 1913 Germany might be expected to have a rocky road in life.

<<There is no magic genie who says such a catastrophic event couldn't happen here. The chances are small, I grant you, but the intrcst formula is not perfect for all time and all places.>>

No one made that claim.

<<You missed the entire point of the article. Some people (not you, because you're 100% rational, always) aren't wired to hold the intercst model perfectly, and WILL panic and sell. In some cases, they might even be right, as we have seen many economies collapse entirely and getting out while you have "a little" is better than not getting out and having "nothing". Russia, 1990.>>

I'm in favor of people making their own decisions as a general rule. The decision I've made to save and invest has been ridiculed by my peers many times. Still, I'm content to live with the fruits of nearly thirty years of investing decisions, while those who've preferred to spend and spend I hope are equally happy with their decisions.

The idea of this article that some people have a genetic predisposition to that kind of decision making is unproven excuse making. An older bit of wisdom is content to observe that a fool and his money are soon parted.

<<For the first, we are definitely a status-conscious society. And our capitalist system encourages (maybe even requires) that we all be good consumers. Therefore, brands are equated with status. You are encouraged to buy particular brands to buy status. Don't have the money for it?

Early retirement is facilitated by not giving a rip about status.

Every large purchase should be accompanied by a question(s):

"Who are you trying to impress?"

"And why?"

>>

Yes, that tends to be true for me.

In deciding whether to buy a luxury, I make the decision based on a three part test:

1) Is it something I can afford without compromising important long term goals?

2) Is it something I want and desire for myself, as opposed to something other people think I should have or to impress other people?

3) Is it something I will use intensively enough for the purchase to be worthwhile?

I'm in favor of people making their own decisions as a general rule. The decision I've made to save and invest has been ridiculed by my peers many times. Still, I'm content to live with the fruits of nearly thirty years of investing decisions, while those who've preferred to spend and spend I hope are equally happy with their decisions.

You talk a lot about being ridiculed and put down for your saving habits. You sound pretty bitter...I'm sorry that others made you feel so uncomfortable and left out during your life.

You talk a lot about being ridiculed and put down for your saving habits.

You know, I've never encountered this personally. I've been dumped on for a lot of reasons, but not that.

Maybe it's degree? My father is a little irrational about being cheap. By this I mean that he's made decisions that have cost him more in the long term because he was looking for a cheap solution. And I don't mean labor, either, I mean money.

For example, we wanted to get a printer for my home-built computer back in the late 70's. Back then, Epson didn't exist yet, and printers were hideously expensive. So we bought a variety of junked printers for a couple of hundred dollars, and we never got any of them to work.

From him I learned that while looking for a bargain was good, there is such a thing as false economy. Cost-effectiveness is more important than being cheap, and part of that is an accurate determination of the real benefit. The most expensive thing in the world is to spend money on something that doesn't do the job.

You know, I've never encountered this personally. I've been dumped on for a lot of reasons, but not that.

Me neither. I think the main reason is because when friends or acquaintances talk about frivolous or extravagant spending, I never call them out or put them down for it. Managing my own life is tiring enough, you know?

From him I learned that while looking for a bargain was good, there is such a thing as false economy. Cost-effectiveness is more important than being cheap, and part of that is an accurate determination of the real benefit. The most expensive thing in the world is to spend money on something that doesn't do the job.

My father is great about bargain-hunting. My first real lesson was when I decided to buy a car. He gave me the Consumer Reports Used Car guide amd said, "just pick one of the top ten and go find it in a nice color". Very pragmatic, easy to follow advice.

The most expensive thing in the world is to spend money on something that doesn't do the job.

I've learned that lesson a few times. But, I notice that a great deal of advertising is based on price, not quality, so a slightly cheaper price seems to be a great concern to many people. I don't think it pays to buy "bottom of the line" stuff if you are going to use it for awhile. For example, I went through three cheap drills before I bought my big Milwaukee. I've used it now for 20 plus years for all the stuff I do around my house and a couple of rent houses and some relative's houses. I expect that it may outlast me, which is OK, my son would love to have it :-)Ted

I'm in favor of people making their own decisions as a general rule. The decision I've made to save and invest has been ridiculed by my peers many times sp

----------------------------You talk a lot about being ridiculed and put down for your saving habits. You sound pretty bitter...I'm sorry that others made you feel so uncomfortable and left out during your life.

6

I will come to sp's defense here. (is that the sound of coffee spraying?) Just because the people he worked with ridiculed him for saving his money doesnt mean THAT caused HIM to feel put down or bitter.

I was always getting, and still get, all kinds of static from people about saving and not buying trendy , gott-have, s't. *I* don't know "how to live" whatever the f that means? I "owe it to myself" to get this or that. I "might as well spend it now while I can "enjoy it". Yeah, whatever. They can ridicule all they want. They don't make ME feel bitter. They don't make me feel uncomfortable. THEY're usually the one's who are bitter and uncomfortable. Oh well, back to work, everybody! (But not me. It's time for a nap)

Your first car was a Prelude? Lucky *****. That's an extremely nice car for a first car. I owned a Civic once, and I liked it a lot. Quite a lot of acceleration for such a low-end car, Honda really knows how to get the most out of a small engine.

Your first car was a Prelude? Lucky *****. That's an extremely nice car for a first car. I owned a Civic once, and I liked it a lot. Quite a lot of acceleration for such a low-end car, Honda really knows how to get the most out of a small engine.

Best car ever. My little Quaalude. I bought it from an elderly couple who had had it for 10 years and only put 30k miles on. It was their "fancy night out" car....how cute is that? They refused to let me test drive it at first (I was just out of college, 24 years old) because they thought I wasn't 16 yet.

That car was the reason I bought a house at a young age as well. The blacktop in my apt complex crumbled during a rainstorm, burying the drains, and my Quaalude drowned. Like, up to the windows drowned. I figured I could maintain a driveway better than they could maintain a parking lot.

"You missed the entire point of the article. Some people (not you, because you're 100% rational, always) aren't wired to hold the intercst model perfectly, and WILL panic and sell. In some cases, they might even be right, as we have seen many economies collapse entirely and getting out while you have "a little" is better than not getting out and having "nothing". Russia, 1990."

About the only ones who 'got out' of russia were a very few percent who could illegal shift wealth to other 'more safe' havens (incuding the USA).

If the USA tanks, where you going to shift your assets to? Everything else will tank too....it is a global economy. If you hold cash, it could become worthless.

You plan for the worst case that is likely to happen. Heck, you could get run over by a runaway truck tomorrow and die...no amount of financial planning is going to stop that if that truck is going to collide with you.

So far, no one has offered a more safe solution to portfolio management than being diversified.

If you don't like that, head for the hills, start a commune, learn survival skills......you might even run into a few who fled the Y2K imminent end of the world still out there...

Did that total the car? My DD1 has an 86 Prelude (her first car) it's still in immaculate condition even at 100K plus miles. She intends to give it to her DD1 when she turns 18. Just as a point of reference, her DD1 is now 4 yrs old. The 'lude doesn't get driven much any more. Two kids don't fit very well in a Prelude (Actually it's the two baby seats that don't fit very well.)Ted

Did that total the car? My DD1 has an 86 Prelude (her first car) it's still in immaculate condition even at 100K plus miles. She intends to give it to her DD1 when she turns 18. Just as a point of reference, her DD1 is now 4 yrs old. The 'lude doesn't get driven much any more. Two kids don't fit very well in a Prelude (Actually it's the two baby seats that don't fit very well.)

It still ran, but the interior was wholly trashed so it did get totalled.

Your first car was a Prelude? Lucky *****. That's an extremely nice car for a first car. I owned a Civic once, and I liked it a lot. Quite a lot of acceleration for such a low-end car, Honda really knows how to get the most out of a small engine.

My first car was a 1978 Datsun B210 hatchback - robin's egg blue.

With the biggest rust holes you've ever seen.

My second car was a 1980 Prelude, bought from a little old lady who barely ever drove it, but had all the maintenance done right on schedule. (The little old lady happened to be my grandmother).

<<There is no magic genie who says such a catastrophic event couldn't happen here. The chances are small, I grant you, but the intrcst formula is not perfect for all time and all places.>>

No one made that claim.

Sure you did. You said it was a "worst case scenario." Now we agree that it is not a "worst case scenario", but only one which has worked in this country, not others, and not in times of runaway inflation as we have seen in other countries, nor in catastrophic wars which have been lost, and perhaps not in other exigent circumstance.

The idea of this article that some people have a genetic predisposition to that kind of decision making is unproven excuse making.

All theories start with, uh, a theory. Since most of the animal kingdom doesn't plan for tomorrow, it seems possible that there is a genetic predisposition for humans not to, as well. Of course there are a few, a very few animals which "squirrel" away food for lean times, but those are a distinct minority.

An older bit of wisdom is content to observe that a fool and his money are soon parted.

I'm not sure what that has to do with the conversation, but it's a nice saying. Maybe you could patent it?

<<I'm in favor of people making their own decisions as a general rule. The decision I've made to save and invest has been ridiculed by my peers many times. Still, I'm content to live with the fruits of nearly thirty years of investing decisions, while those who've preferred to spend and spend I hope are equally happy with their decisions.

You talk a lot about being ridiculed and put down for your saving habits. You sound pretty bitter...I'm sorry that others made you feel so uncomfortable and left out during your life.

6 >>

Heck no, I was never bitter. I had every confidence I was making good decisions.

Unfortunately, in the late 1970s and early 1980s, the idea of working people saving and investing in stocks was a pretty alien idea to most people ---only about 20% of Americans owned stocks at the time.

With the rise of IRAs and 401Ks, that percentage is now above half, and the idea of investing is much more mainstream. Still, I've found the frugality that often permits significant levels of investment for working stiffs is often regarded as a deviant value.

I am embarrassed to say that was entirely on "pen supplies." My brother in law came to visit, brought his mini-lathe, got sick and went home without it. While he is gone I decided to make some pens, and some more, and some more, and well, some more. So I have decided that all the relatives are getting pen & pencil sets for next Christmas (handmade! and pretty nice looking, if I do say so myself), and some will also get some glamour pens, and I will still have a dozen or so left over. OK, I got carried away and am justifying this short-term whim, but luckily I lose the lathe in another couple weeks, so I can't do any real long-term damage.

One of these days I think I'd like to pick up a small lathe myself. Though I think I might like to try very small vases instead of pens. And, it would occasionally be nice to turn knobs or other small furniture details. What brand did you get, if you don't mind my asking? I know just about zero about lathes.

Maybe that's part of it. I managed to recover about $400 in "gifts" with my $700 in "spending." So I'm only down $300! At this rate I'll be saving my way to salvation.

Cost-effectiveness is more important than being cheap, and part of that is an accurate determination of the real benefit. The most expensive thing in the world is to spend money on something that doesn't do the job.

- Gus ----------

I'll say. My example gowing up was my sweet Dad. Here he was head of a division at a major pharmaceutical company, yet drove the so butt ugliest it then became the hippest 1963 Rambler that we lovingly called "the box".

He & I when doing a home repair project, often fabricated our own tools just because we could, & came away from the repair project with that curious satisfaction of knowing with humor we were golden.

The repairs always held.

For me, he taught me the deeperly important lesson that there is cheap & then there is frugal.

Cheap is just cheap.

Frugal is infinitely rewarding in its own intellectual expansion groove.

My father is great about bargain-hunting. My first real lesson was when I decided to buy a car. He gave me the Consumer Reports Used Car guide amd said, "just pick one of the top ten and go find it in a nice color". Very pragmatic, easy to follow advice.

And, it would occasionally be nice to turn knobs or other small furniture details. What brand did you get, if you don't mind my asking?

[[Goofy runs to the basement to look]]

Puff, puff, it's got a decal on it that says "Turncrafter Pro". It's from PSI, which is likely Penn State Industries - where I have dropped another $100 on pen supplies from their website. Looks like that $700 just became $800.

The last time I used a lathe was in 6th grade - I made a bowl, suitable for about 10 walnuts. My parents floored me about two years ago when they pulled it out of a cabinet and handed it to me and asked if I remembered where they got it. I did, of course, instantly, and I brought it home, and it now sits proudly as my change dish/key dish by the door. I remember it being prettier ;)

Anyway, my BIL has his lathe set up for "pens" with the correct mandrel, etc. so I've gone with "pens" this time around. It's actually quite fun, and very satisfying. Unlike most of my projects which go on endlessly, you pick up a wood blank, you drill it, set it on the lathe, turn it, polish it, wax it, and assemble the pen, and 45 minutes later you have a beautiful piece. It's almost instant gratification, and the results are pretty gorgeous, IIDSSM.

He lives about 12 hours away, but he's coming back in early March to pick it up (and his turning tools and stuff), thank goodness, I could go broke if he left it here much longer.

Some people don't take the "long view" simply because they're not wired to do so. That's the idea behind behavioral economics, which involves "grey", as opposed to textbook economics, which has pretty charts and proves that "supply and demand" answer everything, always.

Perhaps. But your premise ignores what we know to be true: you can overcome your "wiring" if it is important enough.

<<Some people don't take the "long view" simply because they're not wired to do so. That's the idea behind behavioral economics, which involves "grey", as opposed to textbook economics, which has pretty charts and proves that "supply and demand" answer everything, always.

Perhaps. But your premise ignores what we know to be true: you can overcome your "wiring" if it is important enough.

Montecfo>>

And many people do, especially as they mature and decide on longer term goals in life than maximizing short term consumption.

Which suggests that the "wiring" analogy is false and merely excuses poor decision making.

Visit the Credit Card board if you want to encounter a bunch of reformed spenders!

Sure you did. You said it was a "worst case scenario." Now we agree that it is not a "worst case scenario", but only one which has worked in this country, not others, and not in times of runaway inflation as we have seen in other countries, nor in catastrophic wars which have been lost, and perhaps not in other exigent circumstance.

This is true, but the "rule of thumb", like almost all rules of thumb, are simply stated for practicality. And under the scenarios you describe above, pretty much nothing (no strategy) can survive with an intact retirement afterwards. So, it isn't practical to consider it.

<<Sure you did. You said it was a "worst case scenario." Now we agree that it is not a "worst case scenario", but only one which has worked in this country, not others, and not in times of runaway inflation as we have seen in other countries, nor in catastrophic wars which have been lost, and perhaps not in other exigent circumstance.

This is true, but the "rule of thumb", like almost all rules of thumb, are simply stated for practicality. And under the scenarios you describe above, pretty much nothing (no strategy) can survive with an intact retirement afterwards. So, it isn't practical to consider it.>>

I guess you are both right. I did say that American history over the past one 150 years was a worst case scenario. At other times I've pointed out that things could be a LOT worse, just as Goofyhoofy did.

Still, as you and intercst have pointed out, it provides a useful guide to what people might expect in terms of bad news for a retirement portfolio.

If things really go to hell in a handbasket, a lot of people will probably be scratching for a living who hadn't expected to.

My general rule of thumb has been to prepare for the worst that is very likely to happen, while hoping for the best. I'm satisfied that intercst's analysis meets that standard of mine.

Well, costs about as much as a 125cc scooter, IIRC. Just not what I'd be interested in, but I know Schred would be - he's one of those very lucky guys who has found a job that he would have for a hobby.

t.

P.S. Thanks for the Introvert book recommendation. I didn't end up getting it on the cheap, but did pick it up on my business trip and got through about half of it on the plane. Lots of good info in there. I've been getting a lot of pertinent info from the self-help section lately ...